The Observer, April 1, 2005
Volume XXXVII, Issue 23
Provost speaks on the tuition increase
Case provost John Anderson officially announced next year's tuition rates in a letter to students and parents on Jan. 31. Undergraduate tuition will rise 7.2 percent to $28,400 for the 2005-06 school year.
The budget for need-based financial aid will be increasing as well by a similar percentage, Anderson said, but the merit-based awards will remain unchanged.
After nearly a decade of increases of less than 5 percent a year, tuition increases in the past four years have reached 7.1, 7.1, 10, and 7.2 percent. The accele-rated percentage of increase in the past few years, Anderson said, was due to increased investments in the campus environment, the Office and Student Affairs, student activities, and an increase in faculty salaries to make them more competitive. He discussed university finances and the reasons behind this increase in an interview with The Observer last week.
Cost of education
"I think it's important to understand – some people think 'full tuition' means you pay for your education. There's an accepted way of calculating the cost of an undergraduate education, if you take all the costs that are applied to undergraduate education – you divvy up the faculty members' time, what fraction of buildings, utilities, investments, whatever you have staffed – and you put all that together. There's a national organization of financial officers that put together a way of doing this, and we're in the process of using their model to do that calculation.
"People who have done that at private schools – and I say private schools because the student-faculty ratio is lower; it's typically one-half the value of a public school – that number comes out to be anywhere from about $40,000 to $60,000 per student.
"We did a rough calculation using our method, and I'm thinking it's going to be between $40,000 and $50,000, but it might come out higher. It won't come under $40,000….
"The tuition is what we charge the students. Even if you pay full tuition, it would cost us money for your education. You say, 'Why do you do that? Why would a business do that?' Well, we're not a business….
"Where does the money come from? The money comes from, basically, philanthropy; that is, people who attended here before have given us money. We have an endowment; a lot of that comes from previous alumni. So the endowment income to the university augments the tuition. And then we also have a stream of research, but the research is really self-contained. So the two revenue streams that really impact under-graduate education are the tuition and the endowment. And gifts. There's a third part, and that's gifts. Every year, alumni and friends and even some corporations give gifts that we can use for undergra-duate education. We're talking many millions of dollars here. So those are the three parts….
Role of tuition
"We have to balance the books. The tuition is set figuring how many students we're going to have, what we need in terms of faculty salaries and staff salaries, and what we need in terms of some investments…. We're going to open the north campus, and that's a $126 million project. We hope that a lot of that is self-sustaining. People pay room and board; that's why those rates are higher, because the places are nicer. It's like a mortgage on a house. That $126 million, we didn't necessarily pay cash for. We borrowed it, and now we have to pay principle plus interest on it….
"Tuition will pay for some things. We have an athletic facility; we don't make any money off of athletics, so the tuition cost can pay for some of that. The new stadium, things that go with it; the data center, we're not charging people for that.… Some of those things will be paid for by tuition as well. There's also other buildings we built. The Kelvin Smith Library still has a debt payment, and the tuition can help pay for some of that. These things all go into it. Salaries go up every year for faculty, and we want to be competitive in salaries, so that's a component as well.
"We're investing in some other things – some other upgrades like Veale Center, and I guess you've seen Wackadoo's. That's a great facility because you can see a lot of faculty there. So some of these facilities require some financing and some tuition.
"So you put all these things together in an operating budget, plus facilities, then you figure out how much tuition you need to basically balance the budget.
Tuition increases
"If we didn't build the North Residential Village, tuition wouldn't necessarily be going up, but I think [the NRV] good for the campus. In the future, you know that we'll be developing the Triangle. That's going to be the college town. It might take five years or so to get going… but I think that will be wonderful for the university.
"The whole idea is that we're trying to get better. We're not just trying to survive. If we're just trying to survive, and go on as we've been going on before, then the tuition increase wouldn't be as high. But if you stay constant, Case will drop in rankings because everyone else is investing.
"We also look at benchmarks; that is, other universities. Everyone says 'the Ivies,' but it's not the Ivies; it's the others. The Ivies aren't necessarily the highest; they're among the highest. You'd be surprised how high tuition is at some pretty small schools. But you look at the Carnegie Mellons and the Wash Us and the Emorys and NYU and places like that. There are a couple of Ivy League schools in that: Johns Hopkins and so on. We're still below the average of all of those schools, even with this increase. That's not the reason we put the increase in. We don't want to be above those people because we're trying to recruit students to come here."
